Posts tagged ‘House Prices’
How can you sit still and earn more than £100,000 in a year? The answer can be in owning a property – and not just in central London where values have soared.
But the ripple effect of buyers being priced out these areas and looking further afield in the capital means house prices in leafy London boroughs such as Chiswick have also seen values rise by six figures during the past year.
The average price of a property in Chiswick – six miles from central London – currently stands just shy of £1m, having risen 13. 6 per cent during the past 12 month, the equivalent of more than £115,000.
The location offers overland trains into Waterloo Station with a commute time of 25 minutes as well access to Chiswick Park Underground Station on the district line.
It is not just the West of London which has benefited from house prices rises. Clapham Common in South West London, has also seen values increase sharply. Its open park spaces are attractive to families, while the area also provides good transport links via London Underground and Clapham High Street train station.
The average price of a home in the area climbed by more than a fifth or £80,000 during the past year to almost £900,000.
And the north of the capital is not immune from six figure price increases during the past year. The borough of Highgate has seen average values increase by more than £125,000 to more than £1,151,000.
Properties for sale:
1. Six bedroom semi-detached property in Chiswick for £2,495,000
2. Two bedroom flat in Clapham for £1,495,000
3. Five bedroom semi-detached house in Chiswick for £1,950,000
Rising house prices could pose a threat to Britain’s economy if a property market boom leads to irresponsible lending, the City watchdog has warned.
A rapid acceleration in house price inflation was highlighted as one of a number of potential threats to Britain’s financial system by the Financial Conduct Authority in its annual Risk Outlook.
The watchdog pointed out that housing market activity appeared to be gaining momentum, particularly in London, while property prices remained elevated relative to incomes and rents.
House prices have risen by 5.2 per cent across the UK during the past year, but growth in London has been more than double this figure at 11 per cent, taking prices back above their 2008 peak, according to the Land Registry.
The FCA cautioned that steep gains in house prices could lead to banks and building societies loosening their lending criteria and advancing mortgages to riskier borrowers.
It said: “The current growth in house prices may be driving lenders and consumers to accept risks and debt levels that may be unsustainable in the long term particularly when interest rates start to rise.”
But it added the Mortgage Market Review, which comes into force this month, would go some way to limiting unaffordable lending practices for new mortgage loans in the future.
The FCA,which takes over regulation of credit providers and debt management firms today, also expressed concern that some borrowers may not be able to keep up with their mortgage repayments if interest rates rose significantly.
It warned: “Perceptions that house prices will continue to grow could lead consumers to make poor affordability decisions on their mortgages based on price expectations of their home rather than details of the loan itself.”
But it is far from clear that the UK is facing a house price boom.
Although house prices jumped at their fastest rate for five years in February, according to Halifax, lending levels still remain well down on the peak seen before the credit crisis hit. Figures from the Bank of England also showed a dip in the number of mortgages approved for house purchase during February.
Mike Lawton, managing director of Which? Mortgage Advisers, said:“The decline in approvals in February proves that the housing market isn’t quite the runaway train some are describing and that things are still tough out there for those trying to arrange a mortgage.”
Robert Chote, head of the Office for Budget Responsibility (OBR), also dismissed concerns that a bubble was building up in the housing market.
Appearing before the Treasury Select Committee, he told MPs that although there may be “bubbly activity” in some parts of the country, the recent rise in house prices could be explained by fundamentals.
He added that he expected growth to slow naturally, with gains easing from 8.5 per cent this year to 3.7 per cent in 2017 and 2018, leaving the average cost of a home around 30 per cent higher than at the start of 2014.
The Bank of England has also said it is ready to take “proportionate and graduated action” if it looks like a property price bubble is developing.
The cost of a home in London hit a new record high in February as house prices continued to race ahead, figures showed today.
The average value of a property in the capital surged by 13.8 per cent during the 12 months to the end of February, to stand at £414,356 – the highest level ever recorded.
Across England and Wales as a whole property prices rose by 5.3 per cent during the same period, to leave a typical home costing £170,000, according to the Land Registry.
But there were significant regional variations in house price performance.
London led the charge, followed by the South East, which recorded annual house price of growth of 7.1 per cent, leaving the average home costing £223,733, and the East, where prices were 6.2 per cent higher year-on-year at £183,285.
But at the other end of the scale, properties prices in the North East fell by 1.3 per cent during the 12 months, with the average home costing £97,332 at the end of February.
In Yorkshire and the Humber and Wales, prices edged ahead by just 1.2 per cent and 1.7 per cent respectively.
Sales levels across England and Wales continued to rebound, with 75,182 homes changing hands in December, the latest month for which figures are available, 33 per cent more than in the same month of 2012.
Within this total, the number of homes sold for more than £1 million soared by 44 per cent to 898.
There was also a 24 per cent drop in repossessions, with 966 homes taken back by lenders during December, down from 1,278 in the same month of 2012.
Nicholas Ayre, managing director of homebuying agency Home Fusion, said: “The gulf in property prices across the UK grows ever bigger with London house prices hitting a new all-time high in February.
“Transaction volumes are rising but are still some way off the peak of the market and the lack of supply is helping fuel soaring house prices in parts of the country.”
Today’s figures are the latest in a run of positive data on the housing market.
Earlier this week the Office for National Statistics said house prices rose at their fastest rate for nearly three-and-a-half years during January, while the British Bankers’ Association said mortgage lending was up 47 per cent in February compared with a year earlier.
House prices are being stoked by a combination of rising demand on the back of the improving economy, and a shortage of supply.
Meanwhile the number of people taking their first step on the property ladder has jumped 42 per cent year-on-year, boosted by better mortgage availability and the Government’s Help to Buy scheme.
A total of 22,400 first-time buyers entered the housing market during February, according to LSL Property Services.
They put down average deposits of £25,773, the lowest level for 16 months.
Around 81 per cent of first-time buyers expect house prices to rise in the coming year, with most expecting gains of up to 5 per cent.
“That’s pushing up demand in the short term, which is supporting prices in the long term.”
House prices are set to jump by nearly a third during the coming five years as the supply of homes fails to keep pace with demand, the Treasury’s chief watchdog predicted.
The average cost of a home is expected to increase by 30 per cent between now and 2018, according the Office for Budget Responsibility.
Robert Chote, head of the OBR, said house prices were being pushed up by a combination of a lack of supply and rising demand, driven by increased confidence, higher mortgage lending and government schemes, such as Help to Buy.
A 30 per cent increase would add £77,000 to the cost of the typical home in England, which currently stands at 258,837, according to Zoopla.
But despite investors causing sharp house price increases in some areas of the country, Mr Chote does not think a property market bubble is building up.
Instead he expects house price growth to slow naturally, with gains easing from 8.5 per cent this year to 3.7 per cent in 2017 and 2018.
“With very rapid house price increases in some parts of the country you might see bubbly activity where people are willing to buy stuff off plan or not intend to live in it,” Mr Chote told the Treasury Select Committee.
But he added: “You can explain the increase in house prices by fundamentals without having to resort to saying there is a bubble going on.”
Steve Nickell, an economist for the OBR agreed. He told MPs: “A bubble arises when demand is being driven by people wanting to get in because of expectations of price growth rather than for somewhere to live.
“The house price to income ratio has been growing for the last 40 years but that cannot go on forever because everything you consume would become housing and there would be nothing else left.”
The comments come as the Home Builders Federation warned that the housing shortage in England had hit one million homes – the equivalent to the number of properties in Birmingham and the surrounding area.
Ten years ago, the Barker Review of Housing Supply warned that at least 210,000 private homes needed to be built each year in England to avert a housing crisis.
But the HBF said an average of just 115,000 homes had been built annually during the past decade, leaving a shortfall of one million properties.
Stewart Baseley, executive chairman of HBF, said: “The Barker Review was a seminal report for housing and starkly illustrated the scale of the emerging crisis. Since then successive Governments have failed to pay heed and develop policies to deliver the homes the country needs.
“As we approach a general election, we now need to see all parties committing to policies that lead to a sustained increase in house-building.”
The HBF said 260,000 new homes needed to be built each year if the Barker Review’s objective of gradually pricing households back into the market was to be achieved.
But 320,000 private sector homes would need to be built annually if the more ambitious aim of improving the housing market was to be met.
The group warned that this was three times the number of properties completed in 2013 and a level that had been achieved in just four years since World War II.
It added that even achieving the least ambitious of Barker’s three objectives – to slow down the rate at which households are priced out of the market – would require more than 200,000 private starts per year, a figure last achieved in 1973.
House prices rose at their fastest rate for nearly three and a half years during January, Government figures showed today.
The average cost of a British home increased by 6.8 per cent during the year to the end of January, the biggest annual jump recorded by the Office for National Statistics since August 2010.
The buoyant housing market is being supported by strong mortgage lending, with the British Bankers’ Association today reporting a 47 per cent rise in total advances during February, compared with the same month of 2013.
At £11.5bn, gross mortgage lending during the month was at its highest level since August 2008.
Net lending, which strips out repayments and people switching lender, was also higher at £700m – well up on the recent six month average of £200m.
Richard Woolhouse, BBA chief economist, said: “Mortgage lending has leapt 50 per cent since this time last year. Mortgage assistance schemes are helping first-time buyers and housing chains generally, as housing market activity rises.”
Lending looks set to remain strong going forward, with mortgages worth £11.4bn approved during the month.
The total was slightly down on January’s figure, but still above the six-month average.
Among the approvals, 61 per cent of loans by number were for people who were buying a property.
Overall, 53 per cent more loans were approved for house purchase during the month than in February 2013.
Matthew Pointon, property economist at Capital Economics, said: “The slight decline in mortgage approvals for house purchase in February is almost certainly a blip, and doesn’t herald the end of the revival in mortgage lending.
“But it does suggest mortgage lending is not set to accelerate out of control, and banks are taking a steady-as-she-goes approach to the recovery.”
The ONS said the strong increase in house prices it recorded was driven by a 13.2 per cent year-on-year gain in London, with growth also strong in the South East at 7.1 per cent and Wales at 6.9 per cent.
Prices rose in all regions of the UK during the 12 months, although increases were slowest in the North East, where the average cost of a home edged ahead by just 0.6 per cent, while in Scotland gains stood at 1.4 per cent.
First-time buyers paid an average of 7.6 per cent more for their home during January than they had in the same month of 2013.
Today’s data is the latest in a run of positive figures on the housing market.
The Council of Mortgage Lenders also reported strong lending during February, while HM Revenue and Customers said the number of homes changing hands had risen for the 10th consecutive month.